SB 34: Creature Crawls from Delta Lagoon

APRIL 29, 2011

By WAYNE LUSVARDI

A bureaucratic creature has crawled from murky waters of the Sacramento Delta.

What could be worse? The pork-laden $11 billion proposed California Water Bond, on the ballot in 2012, that does not include any new water storage and would usurp control of water from local water agencies? Or the “pernicious” $3.4 billion public goods water charge originally proposed by the California Public Utilities Commission?

This is California. So the answer is: Both! The union of the two creatures is SB 34, the California Water Resources Investment Act, by state Sen. Joe Simitan, D-Palo Alto.

This misbegotten piece of legislation was recently passed in the Natural Resources and Water Committee of the Senate by five environmental activist Democrats: Fran Pavley of Santa Monica, Noreen Evans of Santa Rosa, Christine Kehoe of San Diego, Alex Padilla of San Fernando Valley and Lois Wolk of Vacaville. It was opposed by three Republican senators from counties with large farm constituencies: Doug LaMalfa of Richvale, Anthony Cannella of Merced  and Jean Fuller of Bakersfield.

It is probably not coincidental that this bill has been drafted after three state opinion polls showed overwhelming opposition by voters for raising taxes, despite being reported otherwise in the newspaper media. Apparently, those environmentalist proponents of the $11 billion California Water Bond are panicking that their proposed ballot initiative scheduled for the voters will be defeated at the ballot box in 2012.

Thus, an apparent desperate attempt has arisen to gain support from legislators who have proposed a public goods water surcharge to pass the bill now.

New Bureaucracy

The proposed bill is a work in progress, but proposes to usurp control of water statewide by the creation of a California Delta mega-water agency that would have far-reaching powers to fund or veto local water projects.  In essence, this bill would create a new superordinate layer of water bureaucracy with near totalitarian powers that would impose water taxes with no direct benefit to those paying the tax.

Nor would it provide any direct elected representation for taxpayers. It would further remove representative responsiveness and accountability, and thus legitimacy, from “the will of the people.”

On top of that, it would for the first time apparently give regulatory entities — water control boards — the power to tax and/or redistribute water taxes to so-called environmental water projects without any accountability structure to the taxpayers.  It would change the Department of Water Resources from solely a wholesale water planner, engineer and system operator into a cop that would police farms for best water management practices.

In addition to reporting to the governor and the Legislature, the Department of Water Resources would report to the Delta Stewardship Council.  The more layers of government, the more dysfunction. It would be a radical alteration of California’s democratic form of government and separation of powers to tax, regulate and enforce.

If, as many experts say, the structural problems of California’s chronic budget deficits and droughts are unsolvable due its form of dysfunctional democracy, SB 34 signals there is an apparent easy way to solve it: get rid of democracy and replace it with a bureaucratic oligarchy. Think of the power of the New York Parks Department under Robert Moses from the 1930’s to the 1970’s to indiscriminately use eminent domain to build bridges, tollways, beaches and stadiums.

Think of the reincarnation of the oligopolistic Southern Pacific Railroad described in Frank Norris’s epic 1901 novel, “The Octopus: A Story of California,” only with the powers of government to tax, regulate and use eminent domain. Perhaps the neologism Octogarchy would fit for the modern day “Creature from the Delta Lagoon” that has surfaced with SB 34.  Is California’s long experiment with democracy over?  Start following SB 34 to find out.  Let’s look at what’s been proposed so far.

New Excise Taxes

As initially proposed, SB 34 would impose an excise tax on water called a public goods charge of:

* $110 per acre-foot of water on urban retail water customers;
* $20 per acre of land on agricultural water customers; or,
* $10 public goods charge per acre of irrigated land if the agricultural customer utilizes best management practices for the type of crop and soil, as determined by the DWR.

Half of the public goods charge — the excise tax — would go to finance regional water management plans that apparently would require approval by the new California Water Commission-Delta Stewardship Council, not your local water agency.

The other half would support the California Water Commission programs and the Delta Stewardship Council and Delta Plan.  Fifty percent is a pretty steep administrative overhead cost for anything except possibly an Octopus.

SB 34 is in the process of being blended with SB 527, by Sen. Lois Wolk, D-Davis, which would set up a taxing structure.

Phil Rosentrater of the Western Municipal Water District in Riverside County was quoted in the North County Times:

It would force water agencies to pay a steep new water tax with no direct benefit to those who pay. The state Legislature has a long history of borrowing from funds like this and never paying the money back.

Call it an Octopus.

Also quoted in the North County Times, Kim Thorner of the Olivenhain Municipal Water District pointed out that this excise tax would penalize local water agencies for “developing water supplies that reduce reliance on the Delta by having a fee imposed.”  Recycled water, expanded settlement and groundwater basins, conjunctive use basins, and desalination would be doubly taxed. Inevitably, there would be mandates for water purveyors to use green power to pump their water, adding yet another premium on water ratepayers.

Thus far, the Farm Bureau, the San Diego County Water Authority, the Western Municipal Water District, the Olivenhain Municipal Water District, the Friant Water Authority and the California Taxpayers Association have indicated they would oppose the bill.  No wonder the water agencies oppose the bill. It would make them mere appendages of the Octopus. And water ratepayers would be eaten alive by the Octopus.

As Thomas V. Cator wrote in the San Francisco Weekly Star in 1890:

Railroads are good things. So are rivers, but not when they rise above their banks and deluge and destroy.

 

3 comments

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  1. Richard Trainor
    Richard Trainor 29 April, 2011, 09:07

    An excellent and probing story by Mr. Lusvardi. Water is truly the new Gold Rush in California, and a collection of Mustache Pete’s from both north and south are lining up to line their pockets with the proceeds from this new El Dorado. I wonder what persuaded Ms. Wolk to back this bill? And I don’t have much doubt that Governor Brown will back it.

    Reply this comment
  2. Wayne Lusvardi
    Wayne Lusvardi 29 April, 2011, 17:15

    Thank you Mr. Trainor:

    After I submitted the above article a water economist sent me a post from his blog Aguanomics which predicts that farmers will soon be granted solar subsidies. This will provide a perverse incentive for unsuccessful farmers to pump their irrigation water using expensive green power (solar being 5 x base load power rates). If you can’t regulate or tax farmers them then buy them off I guess.

    If you read my accompanying article on how “inflation means California is in default” you will find an explanation for such policies — which is to inflate the wholesale price of everything, including food, to get out of the debt the state finds itself in. The problem with this, as I point out, is that it won’t work unless a cap on state government spending is enacted. If a spending cap would be enacted and inflation takes off within 10 years or so the state would be running surpluses.

    Reply this comment
  3. Wayne Lusvardi
    Wayne Lusvardi 29 April, 2011, 17:37

    For those interested readers you can find the State Legislative Analysts report “Funding Public Benefits of Water Investments” dated March 22, 2011, completed for Senator Fran Pavley of the Resources Committee at the following link:

    http://www.lao.ca.gov/handouts/resources/2011/Funding_Public_Benefits_of_Water_Investments_032211.pdf

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